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Closing Bell With Maria Bartiromo

News/Business. Maria Bartiromo. Analysis of the day's winners and losers in the stock market. New.

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01:00:00

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TOPIC FREQUENCY

Us 13, S&p 12, Goldman Sachs 11, U.s. 10, United States 7, Goldman 7, Jared 4, Europe 4, Lloyd Blankfein 4, Starbucks 4, Seattle 4, Samsung 3, Imf 3, Dempsey 3, America 3, Patrick Dempsey 3, Steve Liesman 3, Ameritrade 2, T. Rowe 2, Cialis 2,
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  CNBC    Closing Bell With Maria Bartiromo    News/Business. Maria Bartiromo. Analysis of the  
   day's winners and losers in the stock market. New.  

    January 4, 2013
    4:00 - 5:00pm EST  

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stay down there for months and months and months. in fact, that's a sign of a bull market. >> now, one other thing, we're watching the s&p as i said very carefully. we've now just dlipd below that five-year high. does that matter to you right now if we were able to fail to do that? >> no, not at all. >> okay. >> you'd take it? >> oh, sure. >> okay. >> i'm not looking at the world through a microscope. i'm looking through a hubble telescope, and when i look back, i'm extremely bullish. >> i listen to ralph. when ralph speaks, you've got to take it really. >> one convert apparently. >> always good to see you, ralph. peter, as always. thank you. happy new year. while we're watching very carefully, we're right at that five-year high on the s&p. will we close above that? we'll keep an eye on that. much more to come on the second hour of the "closing bell" as we close out the first we be of the trading year.
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>> breaking news at the top of the hour. the s&p 500, this close to a five-year high as the bulls finish out a strong first week of 2013. welcome to the "closing bell." i'm emkrb krb along with bill griffith who will rejoin us in just a minute. maria bartiromo is back on monday. here's how we're finishing the day on wall street. the dow jones industrial average higher by 13 points, the s&p at 1466.26. we did it. it needed to close at 1465.77 to hit a five-year high, so there, we have done it, and the nasdaq is higher by a little more than a point, 3,1 a 1. bill, we did it, five-year high on the s&p 500. >> off to quite a start here and the s&p closing at the five-year higher so we're talking pre-financial crisis levels again. i mean, think about that. >> pre-bear stearns and pre-lehman brothers.
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will it last? still facing the budget battle in washington. the fed may pull the plug on qe sooner than expected. let's get right to it. with us is tim sprice and brian jacobson and jeff lieberthal of hightower and cnbc market trader gordon charlotte just fin inishing up trading. what do you think, jeff, going to keep going on from the five-year highs that we're seeing in the s&p 500 right now? >> happy friday to you. i think the unemployment report this morning is telling us a lot, that we still have an economy that's muddling along. it's our view, even with the deal that came early this week in congress, that we still have a drag on gdp of maybe 1%, 1.5%, and we're looking at 2% gdp growth in 2012. is that a yes or no, pushes the markets higher? >> yes. we think stocks will have a good year in 2013. >> tim, you agree, i guess,
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because you liked the jobs report this morning as well? >> i do. added 2 million jobs in each of the last two years and the fiscal cliff legislation behind us. the only thing that concerns me is maes what's the foresight for the u.s. credit rating if we don't get a deficit and budget deal but other than that the economy is very healthy. >> you really care about the credit rating? the last time we had a credit rating downgrade, people bought treasuries like crazy and our interest rates went down dramatically. >> that's right. i think that's a real concern though. i think, that you know, we only have a 60-day moratorium on the sequester, and that's not a lot of time, and the only thing we've really addressed is fixing the tax rates which helps investors with certainty around their own tax planning, but beyond that, we've got a lot to do on the budget and the deficit. >> brian, you sunday a little more cautious than these guys, are you? >> just a little bit. i think that the reason for caution is because we do have the march 1st deadline for the quester when that kicks in. there will be debate about that and the debt ceiling in march. there's going to be the
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continuing resolution that expires on march 27th. when i look at things like the debt ceiling or credit rating of the united states, that's a non-issue. you're right. that's the thing we should have learned back in august 2011. people don't pay attention to the credit rating agencies anymore, especially when it comes to sovereignty debt. >> if they cut enough time it starts to impact what the government has to pay for their debt. >> look at every institutional investor -- >> if it goes low enough some treasuries couldn't buy those because the rating wasn't high enough for them. >> if you look at every single institutional investor, they define that a u.s. treasury security is a separate investment independent of its credit rating. >> because it implies a aaa credit rating that it doblt even have right now. >> interest rates that the
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united states pay is what the united states want to charge it. >> why rate? >> i agree. >> it's pointless. >> they shouldn't. >> can we look at this another way for a minute? let's look at this another way. let's talk about this country being able to pay its long-term bills. forget what a credit agent says about the u.s. balance sheet. i would be more concerned about the long-term costs of health care. >> sure. >> for an aging population by 2022, 26% over age 65 in this country. i'd be concerned about covering our long-term retirement obligations. >> sure. >> those are the things i'm focused on. >> gordon, nobody is worried about that today. the s&p 500 is at a five-year high. should it be? >> i can't argue with the tape. >> can you hear me? >> yeah, go ahead. yes. you can't argue with what you're seeing here. this has been a very interesting week. remind me very much of what happened in y2k. i mean, everybody was sitting there saying, you know what? the planes are going to crash into each other. it's a disaster waiting to happen. people were looking for bunkers,
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and it was all over, and same thing happened this year. were like expecting the whole thing to blow up, the fiscal cliff and all the problems that we were looking at, and then it didn't materialize. >> well, in some ways it is -- very similar because nothing happened in y2k, and this time nothing happened, too, right? >> i think you still have to remember there's a trum douse amount of cash still sitting on the sidelines. that's the important thing to recognized is that this is not a fiscal cliff but a fiscal staircase. the payroll tax got away and it wasn't a cliff ever. it was actually just a fiscal staircase. >> i've been hearing about the cash sitting on the sidelines for years and years. when is it going to move? >> i think it's coming this year. i think the retail investor is coming back to the market and we'll see a lot of that cash put to work 2013. i think that will push the market higher. >> gordon, do you agree?
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>> any time i hear guys say the retail investor is getting back involved, that's usually a sign for the pros to get to the exit. that's the conventional theory over there. look, though, bill, the fact of the matter is you can't find the trends. the employment members are what they are. esessionally all the macro numbers have been good. take a good hard look with what's happening with earnings. this merkt has been a earnings-driven market over the last couple of years so if we continue that trend no reason to think we can't continue to achieve highs. >> what's your best investment idea for the coming year? >> i would say pay attention to technology and energy, not only for this year but the next three to five years out. i think financial services deserves also a close look as well with many healthy financial services companies and, of course, what they have done to de-leverage. would i say those three areas before i would look at and focus on with high marks towards energy and some telecom as well.
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information technology. >> all right, jeff? >> yeah. we like large-cap stocks and in particular we like technology materials and energy. in particular we're actually adding to international markets. we think the valuation is more attractive than the u.s. markets so we think europe is another place we can put money to work. >> gordon, do you see any areas not participating that are warning signs to you or that are opportunities where you can still get in at this point? >> well, one of the things that i've been looking for is a question of whether this whole business of austerity and cutting back is going to have such a detrimental effect that you won't see growth in things like materials and infrastructure overall. i haven't seen that so i think that's a good sign that we'll continue to see growth in those types of sectors? >> brian, i'm not implying that you're our bear, but you are cautious. what's your thoughts for investing this year? >> a little bit more defensive perhaps than they are because i do think that fixed income plays a role in the portfolio, but
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could you looking at international bonds, international securities. don't expect a lot of total concern. i'd be looking at clipping coupons and i'm expecting some of the early volatility let's say the election in italy and the election in iran in the summer and the election in germany in september or october. we'll see volume tilt. the vix could increase so you can probably ride that up and down. >> getting nervous about the rising interest rates at all just in the last 24 hours, as a sign of anything? >> rising interest rates are pointing to just the expectation that the federal reserve is actually -- that there is an end to the quantitative easing tunnel so we've seen the light at end of the qe tunnel, and we know it's probably going to be at the end of 2013. that doesn't mean they are going to raise rates but they are probably going to cut back on the purchases of treasury secretaries and mortgage-backed securities sometime this year, and that's probably going to lift at least treasury yields. >> gentlemen, thank you all. >> good discussion. got to go at this point.
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>> thank you, guys. >> thanks, gordon. >> thank you. >> way to kick off the new year, right? major averages posting their best weekly gains since december of '11 and the s&p 500 has hit a new five-year she. jackie d'angelis joins us with the week's winners and losers. >> a good week for stocks, indeed. a shortened week of trade with the new year's holiday on tuesday, but wednesday's rally helping to drive a good part of the action. the dow, nasdaq and s&p 500 logging single-digit percentage gains for the week. the five-year high for the s&p 500, very significant. meantime, the russell, the dow transports and the s&p mid-cap indices hit all-time highs this week as well. three sessions in a row. but it was a bit of a roller coaster ride for gold investors. a real early in the week turned south after comments in the fed's minutes suggested that quantitative easing could end sooner than expected and retail a big story. december same store sales
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largely better than expected. one of the winners, avon products. gains coming on the back of short conversation and also an upgrade from b of a. they say the worst may be over as sales stabilize and the restructuring effort is under way. family dollar is suffering over a 9% loss for the week, that after the retailer said that the holiday season was more challenging than expected and also it cut its full-year guidins a. finally the financials moving higher as a group after the fiscal cliff deal. genworth with a 14% gain and metlife also a big mover, gaining over 9%. back to you guys. >> thank you, jackie. finishing the trading week, but there's a lot more action ahead here on the "closing bell." >> should the federal budget be run like a household budget, you know, where you spend the same or less than what you take in? why someone who worked in the white house says that's simply not realistic. >> and goldman sachs has done a lot to rehabilitate its reputation, so what did the firm just do that some say just damaged its reputation all over
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it can be really hard to figure out how the government can get control of its finances
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when you're talking about these billions and trillions of your dollars. wrapping your head around it is very difficult. former wells fargo ceo robert kovacevich simplified this problem for us simply on the "closing bell" >> what we need to do in terms of education is look at our government more like a family. our government takes in about $2.2 trillion a year. it spends $3.8 trillion, and it has a $14.3 trillion deficit. let's just take all those zeros away and pretend that our government is a family. so this family earns $22,000 a year. it spends $38,000 a year, and it has a credit card bill of -- or a balance on its credit card of $143,000. >> so should the government manage its finances like most households do to get control of the debt problem? "reason" magazine thinks so but
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cnbc contributor jared bernstein says there's no way. jared, why not? does it oversimplify is it t? why wouldn't that work? >> yeah, i found that to be oversimplifying and misleading. well, first of all, families and the government are different in a very important and actually keynesian way. when families are tightening their belts because of recession, the government needs to loosen its belt with fiscal stimulus to offset the demand contraction, but it has to be temporary. it has to go back the other way around. when families are doing bert and loosening the belt, the government has to tighten its belt so that deficits are declining when the economy is truly expanding. now, we didn't see enough of that in the bush years, actually saw it in the clinton years. i'm very much against what's called a structural budget deficit, a budget deficit that grows when the economy is at full employment, but i'm very much a cyclical budget deficit that grows when the economy needs that kind of temporary fiscal stimulus. >> katherine, what's your criticism of that analysis?
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>> listen, of course, it's an oversimplification to compare the federal government which has very sophisticated budget tools to a house hold. at the same time, the fundament ainl sight is absolutely right. we are spending way more than we have, and when we run out of, you know, credit, when our credit cards are maxed out we're asking for another credit card, applying for another credit card with an even worse rate. you don't have to go into more debt. you could cut spending. >> but his point is you don't do it in the middle of a weak economy. >> you wait until it's growing. >> wait until the economy is growing and that's when you cut. >> he acknowledged this is basically a keynesian point of view and not everybody agrees so that is one argument, but other argument is to say so much of the spending is not helping our economy grow, so much of the spending is waste. it's stupid, it's pointless. it's hindering the economy because it's spending associated with regulation. cut that stuff. >> first of all -- >> jared, we've just come out of a period, let's face it, where we were on a spending binge for
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obvious reasons. we had the war on terror for a number of years, the financial crisis where we had to bail out many corporations and we added so much to our balance sheet, so much debt over that time. isn't it time to start bringing that debt down? that's the whole point of what we're talking about here, isn't it? >> it soon will be time, absolutely time to start planning but let me give you some actual numbers that put this into i hope a helpful perspective. thus far in terms of doing exactly what we need to do, what you just described, we've got $1.5 trillion in spending, ten-year numbers, and we've actually raised 600 billion in taxes from this fiscal deal. that's 2.1 trillion in spending cuts and increased taxes. we need another 1.2 trillion to stabilize the debt as a share of gdp. that's got to be the first goal, widely agreed upon by all budget experts. 1.2 trillion over ten years, that's half a percent of gdp over that period.
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i'm not saying it's easy, especially with a dysfunctional congress, but i don't think that's such a heavy lift if folks were actually willing to make some choices to live within i think -- >> jared, you could have it both ways, right, could you say in the short term we're not going to cut discretionary spending, but in the long term we're going to work on entitlement reform and say, look, if you're in your 30s or 40s, retirement is going to be different for you, but we're not willing to have that conversation so we can't have it your way. >> i disagree. i like where you started. i disagree with your ending. president obama, whether you like it or not, president obama actually brought entitlement reform to the table in mid-december. he brought social security cuts. he brought medicare cuts. >> why won't he bring them around again? >> the republicans completely rejected them. i mean, you saw it. they rejected a deal -- >> >> they bought the cola change when it comes to social security, means testing of
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medicare, brought all of that to the table and that was a no go in this discussion. >> i mean, there's reform and there's reform. >> the president brought social security cuts in the form of the cola, and he brought medicare cuts to the tune of 400 billion over ten years and republicans said absolutely not. >> they wanted more. >> during the campaign the president advertised his cuts of 700 billion in medicare. mitt romney and paul ryan said we're going to put that back in so please don't try to tell me that republicans are on the up and up on this. >> katherine, the last word. >> the idea that somehow we can make cuts, we have to do a little bit later, not quite now, not quite yet, that's what congress loves to hear. if not now when? we've got to do it now. >> that's a good point. i like that. >> we'll end it there. >> jared, giving her the final word. >> that's fair. >> he'll be back. don't worry about that. >> what's eating apple? stock falling today on a day when the market is up. we're going to explain why next. >> plus, is the recovery in housing prices about to hit a speed bump? we're going to get a reality
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check on real estate. diana olick still to come. >> later, goldman sachs's lloyd blankfein not putting his money where his mouth is, embracing taxes during the whole discussion, but his board is making sure goldman execs won't have to pay higher taxes. they got their money early. is this another public relations blunder. the lowdown in just a bit. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ all ] i'm with scottrade.
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it's another reason more investors are saying... i've always had to keep my eye on her... but, i didn't always watch out for myself. with so much noise about health care... i tuned it all out. with unitedhealthcare, i get information that matters...
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my individual health profile. not random statistics. they even reward me for addressing my health risks. so i'm doing fine... but she's still going to give me a heart attack. we're more than 78,000 people looking out for more than 70 million americans. that's health in numbers. unitedhealthcare. apple taking a hit today after rebounding in recent days. let's find out why from jackie
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d'angelis. jackie, why in. >> hey, bill. apple shares closing lower by 2.8% to just over $530 a share. that's about 25% off its all-time highs last year. one of the reasons, concern that samsung electronics will widen its lead over apple in the global smartphone sales in the market this year. samsung could show growth of 35% and strategy analytics says samsung has a very broad product lineup. some traders noted a bearish report about iphone and ipad sales at deutsche bank as a possible reason that the stock was down today. even though the nasdaq closed higher on the day, apple kept -- kept the index's gains muted having the biggest drag on the nasdaq today. despite apple's move lower, it's up more than 4% this week. >> wow, okay. thank you. a new warning that home prices may hith a speed bump in 2013. diana olick has that story. why? >> that's right, michelle. home sales are higher and demand
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is become and supply for home sales is really low. sounds like the perfect recipe for price spikes, right? wrong. growth will slow n 2013 r 2013. why, the latest case schiller home price index shows prices steadily rising, rising because of record low mortgage rates, a low supply of homes for sale and huge investor demand in the huge crash markets, but they really harp on the low supply which was due to anemic construction, a big delay in foreclosures and lots of underwater borrowers who just couldn't movement home prices usually move on fundamentals like job and income growth, and if you go by those, prices should have gone nowhere last year. zillow's chief economist stan humphries agrees. the november report shows prices up over 5% year over year, but he's predicting just 2.5% growth in 2013. again, it's the supply thing. he says supply is going to increase. why? well, now that prices are higher, more people come out from underwater, and the they
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are able to put their houses on the market. plus, big states like new york, new jersey and florida whose foreclosures were stalled, they are ramping up now. thousands of homes where people haven't paid the mortgage in years. they will come to market. now, neither fitch nor zillow claim prices will fall nationally. they will fall in some markets and will rise in others, as usual, but overall the growth we saw last year will weaken somewhat as normal housing fundamentals take over again, and, again, bill, we've got to warn, mortgage rates could rise. >> yes, they could. normal housing fundamentals. >> what are they? >> what are fundamentals? what a concept. >> been a long time. thank you, diana. by the way, previously promoted tom wilson all state ceo was scheduled to be here in about an hour, set to react to the fiscal cliff tax deal and how it impacts his business and we alerted his office in addition to that topic we felt we were also obliged to ask him about a developing national
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story regarding superstorm sandy and a staten island couple whose home was destroyed. as a result, all state has offered $10,000 on their claim because the insurer feels the home was destroyed due to flooding. the couple maintains it was wind that took their home. in the meantime, all state has used images of this couple's destroyed home in commercials about its hurricane response, and the couple is now considering legal action as a result. well, mr. wilson cancelled his appearance with us when he learned that this story would come up during our interview. we would like to say he's always welcome here on the "closing bell" and on cnbc in the future. we will take a break now. >> long-term trend or a one dark week wonder? google up about 4% this week on heels of its antitrust victory. should you seek out the stock in the google trade coming up. also, is goldman sachs risking further damage to its brand? the investment bank's board
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accelerated compensation to save top executives millions in taxes before the fiscal cliff. we'll have a goldman debate on that coming up. and later, from mcdreamy to mcsteamy. actor patrick dempsey beating out starbucks to buy a struggling seattle coffee chain. jane wells has that story, talking about the coffee, coming up in the back half of the show. ♪ [ male announcer ] how could a luminous protein in jellyfish, impact life expectancy in the u.s., real estate in hong kong, and the optics industry in germany? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence.
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goldman sachs likes to say it's in the risk management business, but did it risk its reputation in saving some executives from higher taxes? mary thompson has more. mary? >> goldman has been trying to shed its image, deserved or otherwise, as a corporate vampire and engaging in a pr campaign aimed at showing americans how it's a positive contributing force to the economy, but the investment bank's latest move raising some questions about its sincerity about being a good corporate citizen. despite ceo lloyd blankfein's endorsement of the fiscal cliff deal which raises taxes on the wealthiest americans he acted alone in accelerating pay from past years into 2012 instead of paying it out in 2013 as originally planned. now, some rivals considered doing something similar but declined to do so in part
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fearing a firestorm of public criticism. goldman's decisions meaning top earners including its 400 patters in will avoid paying the new higher taxes on past pay. now, this coming when bankers' compensation and banks' reputations are still hot button issues. one pay consultant told cnbc i guess they didn't care when asked if this would hurt goldman's image but reputation strategist sees it differently telling cnbc i wouldn't think they would were such good investment bankers if they didn't do something like this, temin adding that wall street in general is known for moves to maximize profitability. clients ask them to do it for them, and this time it appears goldman did it for its leadership. back to you, bill. >> all right, mary, thank you. goldman's move to save its top executives some taxes worth the risk to its recovering reputation? that's the question at hand. >> andrew stole theman says it's moves like this that give the bank a bad name but zach brown says the company is doing
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exactly what it should be, protecting the company from higher taxes here. andrew, make your case. >> it's a horrible decision. a time when goldman sachs needs to be mending its reputation by doing this, especially with the "wall street journal" article where lloyd blankfein argued, the higher taxes, it's a good things. optically it looks horribly. representationly it's horrible. a bad, bad decision and part of the reason why none of the other banks did it. >> josh? >> incorrect. the reason none of the other banks did it is because all of the other banks are client-facing. goldman sachs alone among the largest six banks in the country are not client face when you're talking about retail people. they actually have an image to uphold in front of institutions that they really do business, and institutions would look at this decision and say, hey, smart move. there were 1,000 special dividends paid this year ahead of the fiscal cliff by other companies. last year only 500. every industry, every smart company did something along these lines so i really don't
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think -- >> that's one of the dumbest things i've ever heard. >> one of the dumbest things you've ever heard. >> yeah, it is. i'll tell you why, because you're talking about $65 million acceleration of bonusis, talking about an incremental tax difference of 5% so you're talking about $3.2 million. >> okay. >> when you have a bank or brokerage firm that relies on its reputation you can't have a situation where you're basically short changing, at least that's the percep, taxpayers. that's stupid. >> can i help you out with something though? >> that's 2012 pay that they earned, 2012 compensation being taxed within the letter of the law at 2012 tax levels. why would they -- why would they -- >> because there's a bigger cost. >> what's the cost? >> josh, the spirit -- >> nobody will talk about this tomorrow. >> josh, the spirit of the question is, a, isn't it hypocrisy when lloyd blankfein says we've got to give and avoids taxes and second i understand what a company has to do the best it should for shareholders, so you want your
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corporation to pay as little in taxes as is legally justified so your shareholders have more money. why do you have to protect an executive? >> well, so, let me get the first one. is it hypocrisy for lloyd to say we have to give? he never said we had to give. what he said was that taxes probably do need to go up, but at the same time spending has to go down. that has nothing to do with compensation that's been earned in the prior year. >> has everything to do with his compensation when he's saying that people have to pay more in taxes and then he has moved -- every other year he would get his compensation in the following year, except this year, right? and you know that the greatest crime in america -- the greatest crime in america is hypocrisy. >> no, it's not. the greatest crime in america is probably murder, but hang on. >> you can actually recover from murder i think more than you can from hypocrisy in the united states. who is the famous -- who is the famous guy, a boxing manager who killed somebody, right?
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>> you're just playing devil's advocate. >> absolutely. >> it's totally -- believe me, you know where i stand on most issues. this is totally hypocritical. >> did goldman break a law by doing this. >> the good news for goldman sachs they didn't break the law, but given their past behavior, they need to toe the company line -- you're talking about a firm that took $10 billion of t.a.r.p. money and a firm fined $550 million for the s.e.c. by the abacus deal. >> that has nothing to do with the whole thing. it's the american way to avoid taxes, isn't it? if you could -- >> wouldn't you avoid -- >> not avoiding taxes. they are paying taxes on 2012 compensation in the year 2012. they are not avoiding taxes. >> they reduced their tax bite, josh, come on. >> but, bill, i'm not a firm. i'm not a company that took $10 billion of taxpayer money. >> that has nothing to do with
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it. >> and partially melted down the worldwide economy. >> they are back on their feet again. that's irrelevant at this point. >> i don't think so. if you're looking at a company that did something the last couple of years, taking $10 billion of t.a.r.p. taxpayer money, i think they have to pay their fair share. >> let's say this was the hershey corporation and they didn't take any t.a.r.p. money. >> completely different. >> and they are not investment bankers and they are not seen as a vampire squid. >> completely different. >> they make chocolate. why would it be different if they decided to pay bonuses for 2012 a month early. how would that be completely different? >> they didn't take taxpayer money and they didn't have -- >> what does that have to do with it? >> because the -- because the ceo of hershey's did not come on cnbc and sit down with steve liesman and do a sit-down and say everybody has to come together and everybody has to give and pay more in taxes and everything else. >> i'm stunned at you that you're making that statement. it's totally hypocritical. >> a parade of ceo from every
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industry in the country come on and do the rise above stuff and every single one of them agreed spending has to go down and taxes. >> okay. so that's the spirit of your justification because they didn't cut spending it's okay that he avoided taxes. >> no, it's not okay and no one is avoiding taxes. i'm not saying that at all. >> that's it. >> it's 2012 compensation. >> exactly what you're sglag why not pay them at 2012 tax rates. >> they should do that every year. bonuses should be given out every year in december, so from now on all bonuses go out in december, why from now on? why can't they do it this year because that's what's best for their employes? >> if i can jump you. >> andrew, you and i never agree, don't get used to this, okay? >> usually you're taking my head of course, i like it, but really, i think -- on a more serious point, i really think goldman sachs, given what we know in terms of dodd/frank and the negotiations that are going on right now with respect to the volcker rule, i think goldman sachs has to be minding its ps
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and qs and doing everything by the book and not giving regulators and people like me more reason to take attacks on goldman sachs. it's a bad pr move. >> goldman sachs, common stock, raised higher, profits up, company made money, employees made money. getting paid on the tax rate that exists in the united states for this year. i don't see where the controversy is. >> downtown josh brown, thank you. >> started out a tv segment and the house of representatives broke out suddenly. what happened just now? >> more cliffs lie ahead of us. i know you're so happy about that. how much risk does it pose to the u.s. economy? steve liesman speaks with the international monetary fund's chief economist next in an exclusive first on cnbc interview. >> and close your eyes and imagine a single trillion dollar platinum coin, got it? some people are suggesting it could save lawmakers and the president a lot of grief and has. we'll talk to one of them coming up. you're watching cnbc, first in
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monetary fund. thanks for joining us. >> thank you. >> let's talk about the united states, jobs report this morning, a fiscal cliff deal. we're growing about 2%. first of all, your thoughts on the issue of deficits and austerity here in the united states. >> i think that's the main issue. that goes back to what's called the fiscal cliff until this week. we'll have to find a different name for this t, what was done this week was important. devoted to a really extreme fiscal consolidation which would have killed the recovery, but most of the work remains to be done, and i think that not only is it important for it investment we need to put the debt on some sustainable path, but i think what remains is uncertainty in the u.s. about what's going to happen, and if we could clarify this, i would expect uncertainty would disappear and then the private economy would do quite well. >> what is the recommendation of the imf for the united states right now? is it one where they should be cutting deficits right now? >> they should be cutting deficits slowly, steadily and
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then the composition has to be done partly through spending and partly through revenues but not too fast. we think that about 1, 1.5%, that every year for a while is the way to go. if you go too fast, then you'll kill growth. people are going to be depressed. you don't want to get there. if you do it too slowly nothing happens which is also risk. >> you've come out with a paper, a second edition of this paper which was controversial to begin with, and it's controversial again. essentially the way it's within read is that people are saying the imf overstated or understated the effects of austerity on governments and that it really recommended too much austerity? >> well, i think there's two parts to it which is did we understate the effect of fiscal consolidation on activity, and i think the evidence is yes because basically it looks like during the crisis the effect of fiscal consolidation on activity has been stronger than usual, you know, using the jargon that the economy used, multipliers.
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>> how many of a dollar of government spending affects the economy? >> yeah. so this has been stronger. other things equal fiscal consolidation has had more of a negative effect on growth in the short run. now the issue is, okay, what do we conclude from that? first, what we've learned, it's a good thing and important to learn. the second is that that doesn't say that we should just forget fiscal consolidation and the levels of debt are too high, but it means that you have to think really hard about the speed, so when you asked me my advice for the u.s., the speed that i suggested is the speed with which we think the u.s. can consolidate and maintain growth. >> we've been focusing very much on the fiscal cliff, and have we not heard a lot about europe because europe has improved or because we haven't been paying attention? >> no. there are some good news in europe? >> really. >> it's a strange situation. on the institutional side it's clear that 2012 was a sea change.
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they basically decided to do things that they were reluctant to do about. you've heard about the banking union, thinking about a fiscal union, the program that the ecb offered to countries like spain, italy, so a lot of good things have happened. financial markets in europe in general are quite happy and stock markets are very high. what's not happening, and that's what's worrisome, is a real economy which in the end we care about, is doing poorly. >> you'll be restating growth and updating your growth forecast. can you give us an idea of which direction they are going to go? is the world economy a better place now than the last update that you did? >> the last update was in october, right? i would say approximation sideways. no major news one way or the other. some countries more, some countries less. no headline news i think. >> okay. >> we still have two weeks to kind of work out of numbers, but i don't expect major surprises. >> thanks very much for joining us. >> thank you. >> chief economist for the imf. bill, back to you, from as you
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pointed out, sunny san diego, where even the sun couldn't cause the chief economist for the imf to give a brighter outlook on the world economy. >> has had an effect on people. they feel better about themselves. let us know what you catch in the pacific ocean, steve. see you later. >> very good. >> hot or not? google jumping 4% this week alone. pretty big considering its 10% gain for all of last year, so should you buy the stock now or wait a little while? our wall street pro has the google play coming up. >> and next, mcdreamy to the rescue. actor patrick dempsey scoring a win over starbucks in the battle to save a seattle coffee chain from bankruptcy. mcsteamy details right after this. i'm totally focused. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime. tdd#: 1-800-345-2550 until i choose to focus on something else.
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patrick dempsey best known as tv's dr. mcdreamy is about to transition from an actor into a barrister. jane wells explains. >> reporter: he also wants to transition into a turnaround. he bought seattle's-based coffee chain out of >> good morning.
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[ cheers and applause ] >> dempsey today visited some stores, where "grey's anatomy." he said tuly's tried to grow to fast. he plans to stabilize the business and improve quality control. >> we're not going to compete against starbucks. i think that's where they got in the past. we want to take care of the stores that we have and go from there. one day at a time. and work on the quality control and consistency with the product and make it a place that people want to come and hang out and make it cool again. >> the final decision is up to a bankruptcy judge next friday. though dempsey has a team with him, he plans to be in town two or three times a month, to be hands on. dempsey referred to starbucks as the green monster, but today he says he has great respect for the company.
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>> you guys, look at you. you'd go to tuly's now just to have coffee with mcdreamy. shameless. >> the problem, he's in seattle and he can't guest star on downton abbey. and i know that's all you care about [ laughter ] >> google shares added 2% after an announcement they did not violate anti-trust laws. how much upside could there be for the stock? let's go to brian, an options action kribltor. do traders see google going much higher from here? >> google's made a tremendous move here. basically traders selling insurance all over the market place, where it was gold, u.s. treasuries, selling the vix. basically what they did, they said i don't believe google's going below 707 in the next couple of weeks. rather than chase the stock and
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continue to buy hard, they're selling insurance at this point. kind of a wait and see game right now until earnings comes for google. >> would you buy google here? >> certainly on a valuation, it's probably about fair value right up here at this level. but we've seen this company, we've seen wall street rewarded for taking its cash, and dumping it back in this the form of research and looking for new ways to invent themselves. i think they're in a great position. if the market moves higher, google will participate there. the earnings are coming up. google is probably due for a pull back, one or two percent. if you get any pull back, i'd expect to make a new high by the end of the year. >> thank you, brian. for more options inside, tune into options action straight ahead coming up at the top of the hour. >> heard at the water cooler, a trillion dollar coin could save the economy. is that for real?
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>> someone here says absolutely. we'll tell you about the plan and its implications next. [ indistinct shouting ] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪
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treasury secretary tim geithner gets the mint to make a one coin, the value, $1 trillion. then he takes that coin over to the federal reserve bank and deposits it. then the government writes checks against that trillion dollars. so that does that mean there's no need to raise the debt ceiling? joining us now to explain it all is deputy editor is the business insider. joe? >> how you doing? >> there's a law that says the treasury secretary can mint a platinum coin, how does that work? >> the treasury secretary does have broad discretion over specifically platinum coinage, the size of it, the denomination and so forth. a lot of people frustrated with the debt ceiling, it looks like the same thing in 2011, second time we don't think the debt
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ceiling is something to be used for a negotiating point, they're excited this could be a way to get around it. >> we showed that provision there. michelle and i were saying, this reminds us of zimbabwe. wouldn't this cause run away inflation? >> that's what people usually say, but it's important to make a distinction. in countries that see hyperinflation due to massive creation of currency. usually the issue is the government is running out of money because they're in economic trouble and they dump a lot of money directly into the economic system and each unit of money is going to be worth a lot less. in this case, you'd be putting it at the federal reserve, in a controlled manner, not into the economy. the feds could sell part of their bond portfolio so that as the feds spent money against that, the fed could suck that in
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reverse quantitative easing. the key thing, it's a solution to a legal problem. the debt ceiling is a bad law, fortunatelily hay lwe have this loophole to address it. >> sounds incredibly destabilizing, the value of the currency, to know that one person has this ability to adjust the size of the money supply instantaneously i think is pretty negative. >> it doesn't address the size of the money supply necessarily. >> but it ends up being debt foriveness. monetizing the debt. >> although it sounds really absurd and i grant that, i think it's just as absurd to think that a rich nation like ours is about to go into a debate about whether we'll fulfill our obligations. that should never be up to debate.

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